WHO MUST MAKE ESTIMATED TAX PAYMENTS?

Any individual who would be subject to the penalty is required to make installment payments of estimated tax.

Estimated tax payments may not be required if the amount of income tax withheld at the source covers substantially all of the tax liability, such as where income consists primarily of wages.

We know it’s often hard, but think of your tax return:

1. You compute your total tax for the year,

2. Then you subtract the tax withheld at the source,**

3. To see if you have a balance due or a refund.

If you have a balance due of more than $1,000, or more than 10% of your total tax (but not less than $1,000) for the year you may be subject to the penalty for underpayment of estimated tax AND,

You may have to make estimated tax payments.

**Technically, tax withheld at the source is treated as payment of estimated tax.